Wausau President Tells Stakeholders to Aim for ‘Noble Goals’ of Original U.S. Workers’ Comp System

August 24, 2005

The U.S. workers’ compensation system needs evolutionary changes, but all industry stakeholders must never lose sight of the original “noble” goals from nearly a century ago, according to Wausau Insurance President and Chief Operating Officer Joe Gilles.

“The workers’ compensation system is still working — most of the time,” Gilles said Monday in the keynote speech to more than 1,000 attendees at the 60th Annual Workers Compensation Educational Conference in Orlando, Fla. “But we need to work together to keep changing. Remember the original noble goals, but let’s evolve to make the system better.”

Gilles cited the following “noble” goals of the original system:

* Replace a share of lost income.
* Cover related medical expenses.
* Do so efficiently.
* Create incentives for employers to promote safety.
* Create incentives for employees to get back to work.

“We need to constantly compare ourselves against these original goals,” he said. “Despite massive changes in society, these goals remain a constant to ensure our system remains in balance and still works.”

Gilles outlined some key challenges that are testing the system:

* War/terrorism risks are a “new reality” that require congressional
action to extend the Terrorism Risk Insurance Act as a back-stop in the event of another major terrorist event in the U.S.
* Double-digit runaway workers’ compensation medical costs, especially drug costs, continue to threaten the system.
* Excessive litigation in the workers’ compensation system has created a level of expensive complexity that threatens some basic tenets of the system.
* The aging of the “Baby Boomer” generation will dramatically increase workers in the 55 and over age category, thereby increasing return-to-work costs for employers.

Gilles urged all stakeholders, especially employers, to “think big
picture” about the total cost of risk. He cited a recent study commissioned by Wausau that found financial executives believe their companies save at least $2 in indirect costs for every $1 saved
in workers’ compensation expenses. When viewed in this context, the
opportunities for efficiency in the workers’ compensation system are massive, according to Gilles..

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